World’s largest olive oil producer, Deoleo, expects prices to nearly halve in coming months

Record high olive oil prices are expected to nearly halve over the coming months, according to Spain’s Deoleo, the world’s largest producer of the “liquid gold”. 

Deoleo said one of the most challenging moments in the industry’s history is likely to draw to a close, according to a CNBC report. 

A prolonged period of drought and extreme weather, exacerbated by the changing climate in Southern Europe, affected harvests of olive oil in recent years. 

The shortage in supply of olive oil had pushed prices to record highs. 

According to the CNBC report, the shortage had pushed the industry into a crisis mode and prompted a crime surge in Spanish supermarkets. Olive is a staple in the Mediterranean diet. 

Olive oil crisis is far from over

Prices have since eased from record highs as estimates indicated an improved harvest of the oil during the 2024-25 season. 

Harvests are expected to be better in key countries such as Spain, Greece, and Tunisia, CNBC reported. 

“Although there have been steps towards improvement, it would not be entirely accurate to say that the crisis is over,” Miguel Ángel Guzmán, chief sales officer at Deoleo, told CNBC. 

Guzmán noted:

We are still going through a phase of tension in olive oil prices, especially in the higher quality oils, such as Extra Virgin.

He added that there was still some uncertainty about the olive harvest during the 2024-25 season. 

Normalization will be gradual

Deoleo had described the recent years in the olive oil market as one of the most challenging. 

The maker of olive oil brands such as Bertolli and Carbonell over the summer had called for a “profound transformation” of the industry. 

Prices of olive oil are expected to ease from the current levels during November-January, Guzmán told CNBC. But, this will depend on whether harvest conditions remain stable over the coming weeks. 

Extra virgin olive oil prices in Spain, which accounts for 40% of the total world production, were down 19% from the last month at 6 euros ($6.33) per kilogram as of last week. This was also down 35% from January when prices were at a record high. 

In Spanish supermarkets, olive oil prices traded in the range of 9 to 10 euros per kilogram.

Deoleo said that prices might fall to 5 euros if conditions remain favorable for harvests. 

Challenges for industry

In Spain, olive oil production is expected to be around 1.3 million tons in the current season, compared with just 670,000-680,000 tons output last season, CNBC quoted Kyle Holland, senior market reporter for oilseeds and oils at Expana, in its report. 

Farmers and industry players remain bearish about the price outlook for olive oil in the current season. This is also likely to eat into the profits of the sector as production is expected to rise nearly two-fold from last season. 

Holland said that harvests in Greece, Tunisia, and Turkey are also expected to sharply rise from last season, and the quality appeared to be “very good” too. 

Additionally, Deoleo’s Guzman said that two consecutive years of drought have raised concerns within the industry, and therefore it has been facing the need to adapt to adverse weather conditions. 

He said the olive oil industry is currently undergoing significant investments in new agricultural technologies for resilient olive oil varieties. 

He told CNBC:

This is crucial, as climate change has been identified as an existential threat to the industry.